Innovate, Strategise: Build Strong Leadership for a Profitable Law Firm

By Vukani Excellent Mthembu

The legal services industry is changing faster than ever before. Many of us graduate from law school and go on to become lawyers and eventually own our own law firms. However, during our training we are not taught how to run effective, profitable practices. Some lawyers even forget that their law practices are businesses from which they need to profit. Other lawyers treat their firms as if they are only jobs: Waking up and going to work every day is enough for them. They forget about growth, marketing, leadership succession plans and profits.

The main objective of this book is to teach and help fashion non-profitable law firms into profitable entities. This is done through the sharing of important tools and well-structured plans that lawyers can use to build their law firm business plans.

Traditional law firm practice is no longer working, and small law firms that do general legal services work are most at risk. These firms can never be experts at everything, yet they try to handle everything at once. As a result, they often fail. Small law firms generally struggle to generate cash-flow; attract clients; meet clients’ expectations; hire the correct talent; and acquire the right technology for their practices. It does not have to be like that: Law firm management does not have to be difficult. It will not be headache if it is done correctly right from the beginning.

Getting law firm business strategy planning and management correct from the outset means that the business planning architecture, (including your strategic innovation, strategy plan, marketing plan, financial projections and a strong leadership structure) should be aligned with your clients’ needs.

This book will offer you the architectural structure and skills to help you create a law-firm business plan, enabling firm owners, leaders/partners and aspiring law-firm leaders to grow their business using the relevant and correct tools.

The digital world is taking over many industries. Ten years ago, we never anticipated the establishment of fully functional online training colleges and schools, but they are now a reality. Neither did we know that we would one day have online/digital banks that would operate without branches and walk-in clients. In the same way, the legal services
industry is also changing. Clients/consumers of legal services are no longer the same as they were 10 years ago. They first seek whatever they need from a law firm using their digital devices/smart phones, and their decisions are likely influenced by what they find online.

This book contains suggestions of innovative projects on which a law firm can focus, especially when it comes to getting their business online and embracing digital work. Law firm growth strategies should focus on innovation through digital transformation, such as developing more sophisticated hi-tech/legal-tech/legal-software. In that way, law firms can outperform their rivals.

If you want to establish your own law firm one day; if you already have the law firm but feel stuck in the midst of a caseload rather than growing your business; if you run a medium-to-large law practice with partners and are seeking firm growth ideas; or if you are about to be promoted in a big law firm and are terrified of becoming a leader/partner, this
book is for you.

• Language: English
• Publisher: Vukani Excellent Mthembu
• Release date: Feb 16, 2022
• ISBN: 9781005572372

Vukani Excellent Mthembu

Vukani Excellent Mthembu has more than 10 years’ experience in management within traditional and non-traditional law practices. I specialise in commercial law, I deal with commercial and business legal matters. My role is to assist heavily with transactions, documentation and paperwork, but I also help in other company issues that require motions, actions and issues with the courts. I hold LLB from University of Zululand and MBA from University of Reading (Henley Business School Africa). I am passionate about strategic innovation in the legal services industry. My biggest dream is to see legal services industry going green all around the world. I wish to see innovative law firms accepting payments through cryptocurrencies as form of payment. I'd love to witness my peers owning law firms which digitized & 100% online business, during our lifetime.

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Copyright © 2021 Vukani E. Mthembu LLB MBA

Published by Vukani E. Mthembu LLB MBA Publishing at Smashwords

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage or retrieval system without permission from the copyright holder.

The Author has made every effort to trace and acknowledge sources/resources/individuals. In the event that any images/information have been incorrectly attributed or credited, the Author will be pleased to rectify these omissions at the earliest opportunity.

Published by Vukani E. Mthembu LLB MBA using Reach Publishers’ services,

P O Box 1384, Wandsbeck, South Africa, 3631

Cover designed by Reach Publishers

Website: www.reachpublishers.co.za

E-mail: [e-mail]

Table of Contents

About This Book

About the Author

Acknowledgements

Strategic Innovation for Law Firms

Strategy

Strategic Marketing for Law Firms

Personal and Professional Skills Development

Managing People

Reputation and Responsibility of a Law Firm

Leadership

References

About This Book

The legal services industry is changing faster than ever before. Many of us graduate from law school and go on to become lawyers and eventually own our own law firms. However, during our training we are not taught how to run effective, profitable practices. Some lawyers even forget that their law practices are businesses from which they need to profit. Other lawyers treat their firms as if they are only jobs: Waking up and going to work every day is enough for them. They forget about growth, marketing, leadership succession plans and profits.

The main objective of this book is to teach and help fashion non-profitable law firms into profitable entities. This is done through the sharing of important tools and well-structured plans that lawyers can use to build their law firm business plans.

Traditional law firm practice is no longer working, and small law firms that do general legal services work are most at risk. These firms can never be experts at everything, yet they try to handle everything at once. As a result, they often fail.

Small law firms generally struggle to generate cash-flow; attract clients; meet clients’ expectations; hire the correct talent; and acquire the right technology for their practices. It does not have to be like that: Law firm management does not have to be difficult. It will not be headache if it is done correctly right from the beginning.

Getting law firm business strategy planning and management correct from the outset means that the business planning architecture, (including your strategic innovation, strategy plan, marketing plan, financial projections and a strong leadership structure) should be aligned with your clients’ needs.

This book will offer you the architectural structure and skills to help you create a law-firm business plan, enabling firm owners, leaders/partners and aspiring law-firm leaders to grow their business using the relevant and correct tools.

The digital world is taking over many industries. Ten years ago, we never anticipated the establishment of fully functional online training colleges and schools, but they are now a reality. Neither did we know that we would one day have online/digital banks that would operate without branches and walk-in clients. In the same way, the legal services industry is also changing. Clients/consumers of legal services are no longer the same as they were 10 years ago. They first seek whatever they need from a law firm using their digital devices/smart phones, and their decisions are likely influenced by what they find online.

This book contains suggestions of innovative projects on which a law firm can focus, especially when it comes to getting their business online and embracing digital work. Law firm growth strategies should focus on innovation through digital transformation, such as developing more sophisticated hi-tech/legal-tech/legal-software. In that way, law firms can outperform their rivals.

If you want to establish your own law firm one day; if you already have the law firm but feel stuck in the midst of a caseload rather than growing your business; if you run a medium-to-large law practice with partners and are seeking firm growth ideas; or if you are about to be promoted in a big law firm and are terrified of becoming a leader/partner, this book is for you.

About the Author

Vukani E Mthembu has more than 10 years’ experience in management within traditional and non-traditional law practices and specialises in corporate legal services. As an attorney and entrepreneur, in 2018, he decided to maximise his knowledge and skills in business administration and decided to enrol and study for an MBA. During this time, he gained the necessary administration and leadership skills to set up and revamp his own businesses.

Vukani is committed to sharing his knowledge and experience of business administration with the rest of legal services industry ‒ especially law-firm leaders and those who still aspire to become their own bosses and to one day own law practices. Vukani has also published a journal about strategic innovation for corporate law firms. This can be found on the Henley Business School online portal.

Networking is an important skill for lawyers and entrepreneurs, so feel free to share your views, suggestions, and experiences with the author online:

Twitter: @VukaniExcellent

Email: [e-mail]

Acknowledgements

So many people have contributed to my career and studies. I want to offer my humble appreciation to my colleagues, friends, and family for your continuous support. I really appreciate the love you have given me, even when I have not deserved it. May God bless and protect you and your families.

Vukani E Mthembu

Chapter 1

Strategic Innovation for Law Firms

You can’t solve a problem on the same level that it was created. You have to rise above it to the next level.

Albert Einstein

There’s a way to do it better – find it.

Thomas A. Edison

Owing to the rise of disruptive hi-tech companies and alternative legal services providers (ALSPs), such as AxiomLaw, Riverview, LegalZoom, and Valorem, law firms are facing a perfect storm. Legal services clients are adopting or switching to alternative technology-focused options that are replacing traditional legal service delivery models. Clients are willing to switch from traditional providers to alternative, hi-tech-focused providers because technology can now do most of what lawyers could do 20 years ago, but better, faster, and cheaper.

Traditional law firms are finding it increasingly difficult to compete with these digitally reinvented versions of their rivals, who have spent the past 15 years building their innovation capabilities, supported by ever-increasing levels of foreign direct investment. As a result, ALSPs and hi-tech-focused companies has coursed the decline of the market share of law firms. They have taken huge chunks of work from traditional law firms by offering legal services at a cheaper rate, faster, with more expertise than traditional law firms. As a result, the traditional legal services industry is shrinking, and if we do not innovate, we are going to die or be forced out of the business.

What Do Alternative Legal Services Providers (ALSPs) Do?

Alternative legal services providers use legal-tech/hi-tech software solutions that provide:

Document automation and assembly (DIY legal forms and contracts). This includes the design of systems and workflows that assist in the creation of electronic documents, as well as logic-based systems that use segments of pre-existing text and/or data to assemble new documents and clouds.

It also includes so-called contracting: In traditional transactions, people are ‘bound’ to do, to refrain from, or to transfer things of value. In a networked society and in the digital age, transactions do not merely create a binding link, but a complex bond, or even several ‒ some of which may refer to rights and duties. Nowadays, the creation of rules needs to focus on the protection of immaterial things of value, and on the control the actions of people and non-corporeal entities in an environment that is basically borderless.¹

Legal research. Legal research engines are based on advanced search technology from the field of artificial intelligence, data mining, and natural language processing, all with different characteristics and features.

Predictive analytics and litigation data mining. Predictive analytics is the analysis of data through statistical or mathematical techniques. These results are then used for the better prediction of future events and better decision-making. Predictive modelling of litigation management provides the information needed at the beginning of a juridical process to improve it.

Data-security technologies. These are intended to protect the confidentiality of data that is exchanged in client/server data transfers. Fundamental to these technologies is the use of proven, industry-standard encryption algorithms for data protection.²

²Praduroux et al. 2016.

Practice management (Case management for specific practice areas and legal billing). Practice and case management software provides attorneys with convenient methods to effectively manage clients and case information, including contracts, calendar and meeting information, documents, and other specifics. Everything that is involved in facilitation automation in law practices can be considered practice/case management software.

¹Solarte-Vasques et al. 2016.

Who Are These ALSPs?

Table 1.1 shows the market share of each alternative legal services provider and their respective total earnings over the past year. Helebury was acquired by Elevate in January 2019.

Accounting and audit firms. These have a large amount of revenue in legal services. They focus on high-volume, process-oriented work that is complementary to accounting/audit work. The key players are Deloitte, EY (Ernst & Young), PwC and KPMG. The estimated revenue was $900 million in ٢٠١٧, with an increase in the current estimated segment revenue to $1 ٢٠٠ million in 2019.

Captive Legal Process Outsourcing (LPO) companies. These are wholly owned captive operations, often located in lower-cost regions. They focus on high-volume, process legal services work. The key players are Wilmer Hale, Clifford Chance, Eversheds, Orrick, Allen & Overy, and Reed Smith. The estimated revenue was about $150million in 2017, which increased to $300 million in 2019.

Independent LPOs, e-discovery and document review service providers. These companies perform outsourced legal work under the direction of corporate legal departments and law firms. Typically engaged for matter- or project-based work, which is often proactively managed and globally delivered, it includes e-discovery and document review providers. The key players are Thomson Reuters Legal Managed Services; DTI; Midcrest; QuisLex; Integreon; Consilio and L Discovery. The estimated revenue was about $6.2 million in 2017 and increased to $7.4million in 2019.

Managed legal services providers that contract for all, or part of, the function of an in-house legal team. These service providers are typically engaged for ongoing work within scope and are proactively managed. The key players are Thomson Reuters Legal Managed Services; AxiomLaw; Riverview Law; and Elevate. The estimated revenue was about $250 million in 2017, which increased to $700 million in 2019.

Contract and staffing services, and insourcing, and staffing services. These organisations provide lawyers to companies on a temporary basis and can range from entry-level document reviewers to highly-skilled and experienced specialists. The key players are Helebury; AxiomLaw; Special Counsel; Update Legal; and LOD. The estimated revenue was about $900million in 2017 and the estimated segment revenue has increase to

1.1 million in 2019.

Table 1.1. Estimated Segment Revenue for Alternative Legal Services Providers (ALSPs)

Source: Alternative Legal Services Providers 2019 Fast Growth, Expanding Use, and Increasing Opportunity by Thomson Reuters

In 2019, the ALSP market was worth an estimated $10.7 billion. This is an increase of $2.3 billion from a May 2017 study by Thomson Reuters.

The Legal Services/Law Firms Industry

The legal services industry is now in an ageing state, as illustrated by the industry ‘S’ curve in Figure 1.1. There is a lack of technical knowledge in the industry, and ALSPs capitalise on this shortage of knowledge by offering clients more expert legal services at a cheaper rate, at speed, and in a very transparent manner. For law firms to gain a competitive advantage over these rivals, they need to innovate and adopt new ways of legal services delivery that will make legal services faster, more predictable and cost-effective than they currently are.

Figure 1.1: Industry maturity, or S-curve analysis framework

Source: legal services Industry S Curve analysis.

What is Strategic Innovation?

Strategic innovation is an organisation’s process of reinventing or redesigning its corporate strategy to drive business growth, generate value for the company and its customers, and create competitive advantage. This type of innovation is essential if organisations are to adapt to the speed of technological change.

Innovation is about generating ideas and converting the best ideas into value for the business. It is a dynamic capability that aligns the organisation’s effort with its capabilities to do things differently, better than the competition, and in a way that addresses stakeholders’ value needs.³

³ Codexx, 2015; Henley Business School, 2014.

Figure 1.2: Core Elements of Strategic Innovation

Source: Henley Business School, 2014

Why Should Law Firms Innovate?

There are several primary drivers of innovation: Traditional law firms need to tackle increasing competition while decreasing costs, improving efficiency, and generally achieving more with less resources. However, other drivers are important, too.

New technologies are constantly being introduced to the market, and corporate law firms need to innovate to keep up with, or to exceed, the levels set by the competition. By demanding better service, clients are also putting pressure on law firms to innovate.

Other industries with stricter regulations, especially in the manufacturing sector, are constantly implementing measures to ensure sustainable development. These companies are facing an increasing demand for accountability, especially when it comes to the ecological impact of their organisations. On the other hand, society and communities are expecting corporations to do good and to give back to the community. A good company image is important to both customer loyalty and to the growth strategy of a business.⁴

⁴ Baker, 2002:5.

If law firms do not innovate, they will quickly lose their market share – and it has even killed some law firms. A lack of willingness to innovate can leave the firm in a dangerous position, especially when other sectors, like banking, insurance, and the financial and auditing industries, are forging ahead.

As one of the most highly regulated industries in the world, the banking industry is truly inspiring. TymeBank is South Africa’s first bank to completely digitise all of its services. They do not have branches like other banks; no monthly fees and offer low charges on transactions. It has changed the banking system as we know it. With such innovation happening in the world, why don’t we yet have fully digitalised law firms, to show that we, too, can innovate and change our industry for the better?

Types of Innovation

Figure 1.2 depicts the two ends of an innovation spectrum: Incremental and radical innovation.

Quadrant 1 shows incremental innovation that supports the exploitation of an existing product/value offering, while Quadrant 2 depicts the revolutionary type of innovation that supports the exploration efforts. Strategic innovation seeks to span these two types of innovation, extending to Quadrants 3 and 4, in a way that maximises the potential value-creation outcomes.⁵

⁵ Henley Business School, 2014.

However, current thinking suggests firms tend to operate either in the exploitative mode or the exploratory mode. Success in achieving ambidexterity (the ability to apply multiple approaches to strategy, either concurrently or successively) requires the astute management of potentially contradictory law firm structures, processes, and cultures.⁶

⁶ Codexx, 2015; Henley Business School, 2014; 2014; Ross, 2016.

Figure 1.3: Strategic innovation: Exploitation versus exploration

Reviews for Innovate, Strategise

[John Smith · Rating: 5 out of 5 stars]

This book is amazing for law firm employees, law firm business owners and future partners.